US Dollar Guns for Best Gain as Rally Continues

Friday saw the US Dollar rallied strongly against rivals as it guns for its best monthly performance in 16 years, riding on a more stable growth rate compared to other counties in the world.

US Economy Getting Better

Domestic spending dipped in July but was counteracted by renewed business activities in the Midwest showing a vigorous growth rate than initially expected.  This fueled a frenzy of Dollar buying, according to reports.

As the global economy slide deeper into crisis, data showed that the US economy is rising up.  Joe Manimbo, a Forex trader at Ruesch International said that the positive outlook for the US economy contributes to the continued strong performance of the Dollar.

US consumer confidence in August shot up to a five-month high sharply recovering from its depressed levels.  The slid in energy prices and increased optimism for Dollar however offered fewer impetus for new trading.

The Dollar index stood at 77.327 on the day; up by 0.3% in New York trading.  According to Reuters, Friday’s figures showed the Dollar going into its best monthly performance ever since October of 1992.

Euro, CAD, Sterling: Biggest Losers

Meanwhile the Euro slipped further to $1.4670; down by 0.2% at day’s trading.  It was 8% lower than its record high posted in mid-July.  The figures showed the Euro going to its worst downward spin since it was launched in 1999.  

The Yen still stood strong against the Dollar at 108.62, but data showed that the buck is still up by 1 percent the entire August.  The Dollar capitalized on the slow growth rates posted by the Canadian economy as it gained 1.2% against the Canadian dollar, the biggest gain recorded in three-weeks of trading.  Experts believed that only a 0.7% growth expansion can be expected from the Canadian economy as it is still reeling from a near recession with growth rates of only 0.3% in the second quarter.

Economists however contend that the weak showing of the Canadian GDP should not push Bank of Canada to cut interest rates as the accumulated effects of rate cuts could assist in diminishing any negative risks.  Analysts from Morgan Stanley added that domestic inflation is still up but there are indications that the price tension is easing due to the decline of commodity prices.

The British Pound suffered the most as it crumbled against the Dollar declining by 8.1%, its biggest loss since 1992.  The Pound stood at $1.8207 at the end of trading.   In the same note, the Australian dollar tumbled deep to US$0.8579 at the close; down by 0.6%.  The Australian currency suffered a staggering 9% loss this month, its biggest since February 1989.

The outlook for the Dollar remains rosy this coming trading week and currency analysts strongly suggest that traders must regain their positions by selling into the strength of the dollar.